Episode 39

Money Miniseries 2: Freedom in Frugality

Episode Transcript

Dr. Randy Lehman [00:00:00]: Welcome back to The Rural American Surgeon. Today, we're diving into episode two of our financial miniseries. This one is all about the unsung hero of wealth building: frugality. Before you mentally tune out, frugality is not about pinching pennies or living like a monk. It's about freedom. I've said before that my number one value really is freedom. It's about having the space and the margin in your life to say yes to the things that matter most.

Dr. Randy Lehman [00:00:30]: I'll say this upfront: if you don't get this principle right, no amount of income will ever be enough. In our last episode, which was an introduction to this miniseries about finances, I talked mostly about purpose. Today, we're going to start talking about more practical tips. I would say before I start that, again, I'm not a financial advisor. I'm not telling you any specific investment things. You know, take this for what it is, which is really an entertainment and motivation podcast.

Dr. Randy Lehman [00:01:01]: I highly encourage you to spend time thinking about your own money management and researching. There's a lot of great resources outside of your personal network. You can listen to things online, talk to trusted advisors, and do a lot of reading. That's what I have done. When I describe my own approach to personal finance, I would say that from a saving perspective, I ascribe to the Dave Ramsey philosophy. He's a polarizing figure, but he's very effective at getting people out of personal debt.

Dr. Randy Lehman [00:01:32]: From an investing standpoint, I am essentially a Robert Kiyosaki follower. If you don't know those two people, I would send you their way and I would suggest looking up some of their information. Again, both are polarizing but have changed, I would say, hundreds of thousands of people's lives for the better. Anybody who has something useful to say is going to be met with a lot of criticism. Let's talk in specific detail about the things that I have done in my life and how I think about personal finance from the first, most important thing. It doesn't matter what kind of return you get on your money if you don't have something to invest in the first place, right?

Dr. Randy Lehman [00:02:33]: Aside from frugality, there's a concept called minimalism. I've been sort of on this minimalist train as I continue to ironically accumulate more assets for about a decade. As a matter of fact, back in residency, Brittany and I hosted a limited release screening of a documentary called "Playing with Fire." It was something you could sponsor at your local theater and you could sell tickets ahead of time, which we did. Our program director bought like 20 tickets, so there were about 60 other tickets. We hosted this single showing for this documentary just to show that all along the way I've been passionate about this topic, and it's mostly about freedom.

Dr. Randy Lehman [00:03:36]: Even when I didn't have it, like there was a period in time when I was a resident or had a negative $150,000 net worth, there's a point where you can't do things like this podcast, which is kind of a give back, a thing that I've wanted to do for a long time. You have to have the capacity to do these kinds of things. What ends up happening if you can generate a certain level of financial freedom is you can buy back your time, and you can then buy back your energy, placing it towards some sort of purpose-driven work, even if sometimes that work doesn't pay. For example, this podcast costs me a lot to produce, but the person that you're most helpful to is yourself.

Dr. Randy Lehman [00:04:37]: Five years ago, I listened to a lot of podcasts and read a lot of stuff online while I was a resident, going through this struggle, and paying off debt. I owe a lot to those people, and this is essentially my give back to anybody that feels stuck financially and thinks that there's more because there actually is. The FIRE movement stands for Financial Independence, Retire Early. Now, I don't plan to retire early, but I absolutely believe in financial independence. It doesn't happen by accident. It starts with spending less than you earn, always.

Dr. Randy Lehman [00:05:08]: The documentary didn't talk about depriving yourselves. It teaches how to be intentional, and that's what the whole FIRE movement is about. You want to ask the question: what do we really need? What are we really after? If you have this mindset, it gives us the freedom to say yes. In my life, this has applied to mission work, family flexibility, ultimately building out Liberty Clinic the way that I wanted to. A core underlying thing in the FIRE movement is called the 4% rule. My take on the 4% rule is based on a study called the Trinity Study, which analyzed 30-year periods with a diversified portfolio of stocks and bonds.

Dr. Randy Lehman [00:05:40]: It asks: how much can we withdraw from our whole portfolio every year in perpetuity so that our money will never run out? The answer is 4%, basically. This means if you have stocks and bonds and you pull out 4% every year, according to the study, you'll never run out of money. There's a lot of controversy about this. I have friends who invest in real estate, and people in real estate generally feel like it's more about cash flow, which I agree with because real estate is different than a stock and bond portfolio.

Dr. Randy Lehman [00:06:40]: I personally have applied this 4% rule to my own life, even though I primarily invest in real estate. I track my net worth monthly on an Excel spreadsheet. Part of the spreadsheet is a little window that says "FIRE budget," I think, and it's basically my net worth times 4%. As I watch that grow, I know that I could withdraw that much off of just my assets and live without working forever, partly because I have leveraged real estate rather than a stock and bond portfolio. We'll talk more about that in later episodes when I discuss investing, but right now, I'm focusing more on frugality, saving, and minimalism in this episode.

Dr. Randy Lehman [00:07:40]: As I talk about the 4% rule, the idea is if you live off 4% of your total investments each year, then you're financially independent. So, if you want to live on $40,000 a year, you need a million to be invested. If you want to live off $100,000, you'll need 2.5 million. The beauty of this is not in hitting a number. The beauty is in realizing that your spending dictates your freedom. The lower your expenses, the lower your freedom threshold.

Dr. Randy Lehman [00:08:12]: What is different about frugality and scarcity? Because I talk about an abundance mindset. It's important to have an abundance mindset, not a scarcity mindset. Let me be clear: frugality is not about being cheap. It's not a scarcity mindset; it's a clarity mindset. It's about seeing your possessions for what they are. They're not trophies, they're tools. They're not status symbols; they're responsibilities. This is where Robert Kiyosaki, in his book "Rich Dad, Poor Dad," says that your house is a liability, right? Obviously, it's not really a liability in the sense of your balance sheet. You could sell your house, you have equity, and you could get that back, right?

But a lot of people say that their house is the best investment they ever made, but that's because the house is the only investment they ever made and probably the only leveraged investment they ever made, I would say. But the reality is that the house does.

Dr. Randy Lehman [00:09:13]: It just keeps up with inflation in terms of the value, and it's more of a forced savings account. So you have a mortgage payment that you have to make. Really, what happens is your house is something that takes money out of your bank account every month, and so that turns into a lot of other expenses. Basically, it's trapping you. You know, it's a liability in that sense. Meaning that as

Robert Kiyosaki defines an asset and liability, which is not the way that your accountant would or necessarily in an accounting class or anything like that, but it does help your mindset and has helped my mindset. So his definition of an asset is something that puts money in your bank account each month, and his definition of a liability is something that takes money out of your bank account every month. From that regard, your house is a liability. I do feel that way, and I think that for most people, there's a lot of people that are housebroke.

I remember talking to people in residency and a young staff member, a breast surgeon, for example, that I was working with. She's telling me about her $750,000 house, and I'm like, what are you talking about? Like you still have student loans and you have a $750,000 house. I'm not sure if I told the story before or not, but a chief resident actually in plastics. So he's like at the very end, and it was like when the plasma TVs had come out, the curved TVs, and it was around Super Bowl time.

What's ironic is we sat there, and a plastic surgeon was talking to the residents at the morning conference about finances. Afterwards, we started talking, and he had just signed his new contract and his first job outside of residency. He got a signing bonus, but it hadn't come in yet or anything. It's like whatever since January, February, and he had just bought the biggest TV that you possibly could to host a Super Bowl party. He essentially bought it on 90 days, same as cash.

The tendency is for people to expand their lifestyle very rapidly, to spend over what they're making, no matter how much they're making. That is not going to be a recipe for long-term success because you will never have anything that you can then buy your own freedom back. You have to have a margin. You have to get money put aside and then invest that money, right? Basically, we live in a world that sells more as the answer to everything: bigger house, fancier car, new gadgets. But often, more just means more stress, more cleaning, more maintenance, more debt.

I've seen this play out in real life. When you buy that house, you're not just buying the home; you're also buying the bigger the house, the bigger the property taxes, the bigger the insurance premiums, the higher it is for heating and cooling costs. You have to buy more furniture just to fill the house. The fancier it is, probably the fancier furniture, it requires more maintenance and cleaning because there's more space to clean and maintain. You have to have a nicer car to look appropriate in the driveway and match your neighbors. You have to have a manicured lawn to keep up appearances. Maybe you have to send your kids to the private school just to match the zip code, and on and on. You have to join the country club because all of your neighbors are joining it.

When I was graduating residency, I went to Winamac, Indiana. The funny part about it is I was already investing by that point. I had spent time, but I'll talk about that in just a second, but paying off my student loan debts. I'd done several moves to get myself to a freedom position before I even graduated residency. I had heard about the physician mortgage, right? Basically, what the physician mortgage is, is you can buy a house with low or no money down with no PMI, which is mortgage insurance. Normally, if you put down less than 20%, you have to pay insurance in case you default on the loan. But if you're a physician with a high enough income, then you can do this type of physician loan.

Well, I had gone from a negative $150,000 net worth when I started residency to a positive $400,000 net worth by the time I had graduated residency. I'll tell you exactly how I did that in a minute. I still wasn't super cash flush right at that point, and I had a good job because I was going to general surgery in a rural place, which, you know, don't sell yourself short. It should be a great job. I was calling just to see the details about a physician mortgage, and I called the bank. The bank said, yes, we would love to give you a physician mortgage, we would happily provide you a zero money down loan up to $750,000 for a house and up to 1.5 million if you just put 5% down, no PMI.

I said, okay, that's great, then you should easily be able to lend against this house that I have under contract in Winamac, Indiana, for $83,000. Then they about choked on their soup; you know, well, okay, we'll have to see about that. So then they get back to me and say, actually, you know, our physician mortgage deal, you had to be starting a job within three months in order to qualify for it. This was in February. They said since you're not starting a job within three months, we can't lend. I said, that's fine, I'll just put 20% down then, and you can just do a standard mortgage, and you can just use my residency income because I'm sure that's more than enough to buy a house like this.

Well, actually, you told us that your residency job is ending, so we can't qualify you off of that income anymore either. You know, basically, we can't do the mortgage, right? So crazy. What this means is they're trying to do a big juicy mortgage and essentially screw you, which is the high-paid, financially illiterate physician, and get a big, big juicy loan on a house that they know you're going to be good for it.

Let me talk to you about my house. It was 950 square feet. It was built in the 1950s. It was cozy. It had three bedrooms and one bathroom. It had a sort of unfinished basement but full basement in a backyard. It was right in town and it was two blocks from the hospital. It was essentially meaningless to me. I was obviously not housebroke, okay? I was not trapped by that house. I could do anything I wanted to that house. It allowed me great freedom to be able to do anything else that I wanted. Now if I had an ego that would not let me buy that house, we would have had a problem because of the. I'm proud of the house for many reasons, but primarily because of the freedom that it allowed me to have.

But I think a lot of other people think they need to have a house that looks like a doctor house, but you don't. Why? Is that giving you any additional satisfaction, or is it just trapping you? I'm telling my story because it's very different from what I have seen almost everybody else do. I think if you, you know, the white coat investor talks about living like a resident. But the thing is, I live honestly kind of less than most residents that I knew.

And I knew people that are in medical school, that meant they had big luxury apartments, and they're just putting it on a student loan. And it's like, don't take out loans in your residency or in your, I mean, not residency, but in your medical school for your living expenses. Like, that's crazy. You need to not accumulate personal debt on basically things that are lifestyle. Controlling your lifestyle is the first way to give yourself some freedom.

Minimalism gives you headspace. I mean, why do people that go crazy get put into a padded white room with a white straitjacket on, right? I mean, I don't know how much that actually happens, but in terms of that picture in our mind, it's simple. There's nothing going on there. All the stimulation and all the stuff weigh heavily. The more stuff you have, the more that you have to maintain. It's stress, and you don't need it.

So, you can take that as far or as little as you want to. I don't think there's a right or wrong recipe for anybody, but I think that it is worthwhile for everybody to think about it. So minimalism, just think about it as the upgrade. Frugality is the gateway, but minimalism is the upgrade. Minimalism asks what adds value to my life, what do I actually use? And it frees you to let go of the rest.

When you start to see your stuff as a liability instead of an asset, something powerful happens. You stop needing more to feel happy. You start valuing space over clutter, experiences over things, and people over possessions. That's where the real joy in life shows up. If I want to give a little credit where credit is due, I would like to talk about Dave Ramsey for a second. I would say he's helped hundreds of thousands, if not millions of people, and I fully agree with his advice on getting rid of debt, building an emergency fund, living within your means.

But I'll say this respectfully. When it comes to investing, his strategy falls somewhat short. His assumptions are quite conservative and sort of one size fits all, and it doesn't really serve everybody, especially professionals like physicians with different timelines and incomes and tax realities. I'll talk about that more in future episodes, terms like managing your taxes and what you should really expect. But certainly, you can just invest in retirement accounts, fully fund them, and then buy stocks in basically an index fund, you know, or whatever you want to buy, and not ever use any debt for any of your investing.

I think you can get along just fine as long as you start again with the basics of frugality and have a buffer of money that you can start with and start investing. The power of compound interest will work in your favor in the long run.

The other thing I want to go back to the 4% rule and say is that the 4% rule, based off a diversified portfolio of stocks and bonds, gives you a number that in some models you would go down to zero. Meaning your net worth will continue to fall over time and then it would end up at zero over 30 years. Some people may want, if you want to be really free when you're like in your 30s, you have a time horizon that's longer than 30 years, right? So that doesn't really apply.

You also might be buying different types of assets besides what was studied in the 4% rule study. It also might not apply. I think everybody that's a physician understands when a study does or doesn't apply. For example, watchful waiting for hernia. We did three big studies, basically thousand, a couple thousand patients, and we saw that essentially it's a 1% risk per year for emergency surgery, basically the hernia to turn into an emergency setting.

Watchful waiting for an asymptomatic hernia in a man is a reasonable option. Right, because all those patients were specifically asymptomatic hernia in a man. So how does that apply to a woman? How does that apply to a minimally symptomatic or mildly symptomatic patient? You can start to extrapolate stuff, but it's not the actual population that was studied. So when you're starting to apply similarly advice for financial things, it's not a one size fits all thing, and you have to figure out what your own, you know, risk tolerance is.

But everybody, there's a phrase that says, like I've heard it's a, annual income 20 pounds annual expenses 20 pounds and 1 pence result misery, annual income 20 pounds annual expenses 19 pounds and I don't know, 99 pence result bliss. Basically you live below your means and that's where your bliss occurs. But it's partly, it's because, and this is why I think giving money away matters. I'll talk about this in a full another episode.

When you give money away, you realize you don't need it all. Once you realize that I don't need it and then I'm beyond, I've gone beyond scarcity and anything else is a bonus. You live life with an open hand, treat it like it's not even yours in the first place, then you can get so much more mental freedom and space. That is what you're basically trying to do with your frugality.

How in residency did I go from such a negative net worth to such a positive net worth? It happened by living below my means, but not maybe in the way that you would think because there has to be a margin between your income and your expenses. You have two levers that you can pull. You have your income and you have your expenses.

I spent a lot of time in this episode talking about your expenses and I think that the house is probably the number one thing for most people because they buy a certain degree of house. I would love if this episode motivates somebody to buy a smaller house. I think you can get trailers still for $35,000 to $50,000. You can be very creative and you do not need the house that you maybe think that you need.

It is very powerful when you're making half a million dollars and you're living in a house that you could purchase for two months' income, right? You're in a powerful free state in that moment. If anybody has anything to say about your living situation in a judgmental kind of way, they don't have a right to say that, and it doesn't matter. It's so funny how you're the most important person to yourself in the whole world, except for when it comes to your opinion of yourself, right? Other people's opinion of you matters more than your own opinion.

Your opinion of yourself should be what matters. I would love to motivate someone to purchase less of a house and instead choose the freedom that it gives you. The house can always be there; you can always get it later, but it's not going to increase your satisfaction. Matter of fact, it might increase your satisfaction by having just a fire ring that you throw in the backyard. You burn a little bit of wood and you walk out there and it's less steps and it's closer, more convenient, and everything's easier because it's smaller.

If you want to just replace all the windows and doors in the house, you can. If you want to rewire the whole house, you can. Of course, I did all this in my first year out because it doesn't really matter that the dollar amounts, they don't make any difference. Then you've got a problem, which is a tax problem, and you can then start investing and go that way. But let's go back to me in residency.

Okay, so I got married in my intern year, and I had read Robert Kiyosaki when I was like 10. Rich Dad, Poor Dad. And I understood and believed in the power of investing in real estate. But I kind of wasted a lot of time in college, playing Mario Kart and just farting around. I worked hard. I always worked hard. I made good money, I got good scholarship deals. I went to medical school with no debt because of that. Then I did take out loans for my tuition alone, but then I kind of worked deals. I sort of house hacked. That's another term that if you don't know, you should look it up. I would say go to the Bigger Pockets Money podcast and check them out. Talking about house hacking, it's a great way to get started if you don't have a whole lot of net worth.

Basically, there are a lot of different ways to do it. You could buy yourself a fourplex, live in one of the four units, and rent out the others, and then cover your living expenses that way. Or you could do what I did when I was a medical student, and I bought a house. So we shared living expenses, and I had roommates, and I had three other roommates. Basically, I was money ahead every month, paying for the expenses of my house but still contributing to other living expenses. That's good for everybody. When I went to residency, I then house hacked again.

The way I house hacked in medical school was different. My grandfather, who I'm extremely close to, is 96 now, and he's one of my biggest role models for investing. Basically, his MO was to buy farms and pay them off throughout his lifetime. That's a pretty good strategy, except it's not the strategy I'm doing because I have other, again, issues like he doesn't have the income issues that I have. So you need to figure out a way to manage your taxes in my situation where he didn't ever really have that. He had farm expenses and things to write off against. Basically, my grandpa is the ultimate example of frugality.

He then had some money that he could help me with to get started. I went to the bank, but they didn't want to lend to me because I didn't really have income as a student, right. So my grandpa lent me money to buy the first house, and I made payments to him. When I sold that house, I made a profit. Then I turned to my grandpa again. I said, "You want to do the same thing?" But, I was going to a market where, first off, we were further out from 2007, and so prices had gone up. The first house that I bought was $68,000 right in Cincinnati and rented it out for, like, 300 bucks a room to three other guys, something like that, and easily had everything covered.

Well, then I went to Rochester, Minnesota, bought a house for $150,000, and lived there with my wife. Then I got married, I got roommates, and my wife and I had shared living space. We still lived there, and I shared a space. There is an element of sacrifice, right? If you say, well, I can't do that, then maybe you can't make the progress that I made, right? You just have to understand the things that you're actually giving up for the lifestyle that you're living. Had roommates with my wife, had a baby, and kept living in shared living space for a while after that. It wasn't like a year, but it was several months after that.

Then as far as my personal living things that I had going on, I was actually driving for dollars, looking for something closer to work. I mean, I was like five blocks to one hospital and maybe a mile and a half to the other hospital, but I wanted to be two blocks away from that hospital, right. So, I wanted to be able to walk and be more, even more and more efficient with my life. That also helped me when I took my first job and I got the house two blocks away from the hospital. I still drove sometimes, but you could always just walk, and all that time that you save allows you to focus on other things.

As I'm driving for dollars, I come across this 12-unit apartment that's on an estate sale. Brittany's driving with me at this point, and I think we were just married, I would assume. She said, "We should move there," and I said, "Hey, that's a good idea." I called up my trusted money partner, which was my grandpa. There's somebody in your life that I think would do that for you if you prove that you can manage money wisely, right? So I said, "Grandpa, you want to look at this? You want to go and do a deal?" It was in a good location, between Rochester, Highway 52, and St. Mary's Hospital. There are only two blocks in between there, and they're not building any new real estate in that area.

It's an older building and had a lot of issues. As my grandpa would say, there's a lot of hairs on that frog. It was a closed-bid auction, and we ended up putting an auction and bought it. We paid $776,000 for it. I had a plan, and I had bought a book, estimating rehab costs, and I was going to flip it, raise the rents, and do better basically on it. I thought it was going to cost $300,000 to $350,000 to do the remodel, and then I went and got quotes for everything I wanted to have done, and it came in at $1.2 million. So, do your homework, obviously. That was very stressful, and I had to kind of pivot and think, you know, and I was doing all this in residency, right.

So in my free time, and there is downtime in residency, I was still getting after it and trying to make this deal go. It's hard to summarize the whole thing really quickly, but basically, you just have to keep looking for answers, right? What I ended up finding was a design build firm in Rochester. I approached them and explained the situation. They said, "Well, let's see. We can't really commit to anything. We want a hard answer, but they think they could do a little better."

I had to give on certain finishes and whatnot. What we ended up doing is, I spent a lot of time talking to my grandpa. The building was built as two six-unit connected apartments. I lived in one unit and essentially remodeled it, bringing it up to its former glory, restoring the hardwood floors. I was laying tile, putting in new toilets, painting, and doing things like that. The other half, built later, was actually built with poorer quality. So for that one, we brought in the design build firm, and they remodeled one. I put up the money, like $10,000 to $15,000, to remodel the one I was in, plus all the sweat equity. Grandpa put up the money for the design build company to do the one unit in the back. We had proof of concept and then we said, "Okay, now we can believe our quote, we can believe our cost." They went ahead and did the other five, and I went ahead and did the other six.

We were able to get the total cost of rehab to come in around $800,000. We had a windfall profit because the thing got appraised for $1.9 million after we had a little less than $1.6 million in it. So, great, but.

But not still the worst deal I've ever done. But it was a winner and learned a lot. And so just doing a deal helps you to learn a lot. But where I was going with this is in residency. I had four things, not just my residency income, that increased my personal net worth.

Number one was my residency income. Number two was moonlighting. The funny part about that is you can work a couple of weekends a month and double your income as a resident. The best part about that for me, if you have the opportunity to do it, you should do it. I guess maybe I don't want to say it that strongly, but just you should consider it. We'll put it that way.

Because I became a better doctor because of moonlighting, as I was seeing things that I wasn't normally seeing as a general surgeon. I was looking at the patient from a different lens. And what I realized is I could go work on like a Saturday moonlight, and I could make, you know, like 80 bucks an hour and do snotty noses from nine to five, go home, feel sick, and not have any time with my family.

Or I could work Friday and Saturday night, a 12-hour shift overnight in the ER, make $120 an hour, and sleep most of the night. I actually hacked that to the point where I took my family with me, and they would stay in the call room with me in the rural emergency room, and I would just wait for something to come in. The vast majority of the time, it felt like a camp out. Even my little daughter would go with us, and it was a deposit in so many ways.

You're looking for these ways to hack your life, so that you're not actually losing, you're actually gaining - like minimalism, thinking of it as an upgrade. Right? And now for me as a staff surgeon, the way that looks is I go do moonlighting. So maybe you have a job, you have six to eight weeks of vacation per year. What are you going to do with that time?

Why don't you go moonlight, and go a few weeks a year, cover a rural emergency department, just for general surgery. You're going to get essentially a paid vacation. Just make sure it checks all the boxes and it works for your family. That's been a great strategy for us to do essentially the same thing. Now that I'm a staff surgeon, I love it, and I've made a lot of great friends. I feel like I've expanded my skills, and you see how things are done in a different place. So that's something that I've done.

I was saying that my residency income and my moonlighting income. The third thing that I did, big tip, is I signed a contract my second year of residency. I committed to a small town in Indiana and signed a contract with them, which included a loan repayment stipend.

But it wasn't really tied to my student loans. It was just a free $200,000 that was paid in equal monthly payments over three and a half years. That money obviously I could use to pay off my student loans, and I did. At one point, you know, I got married, we had car loans, and I had student loans, my wife had some student loans as well. Different ones mattered differently to us.

Dave Ramsey has the debt snowball method. He talks about putting your debts from smallest to largest and paying off the smallest one first, then paying off the next one and so on. You have momentum in taking your payments for the smallest one and applying them to the next one versus the so-called debt avalanche, which would be to line them up in highest to lowest interest rate and pay off the highest interest rate one first, which mathematically works better. But I would encourage you to think about it in your own life and just see.

Because there are certain things that matter specifically to you. For example, Brittany had a student loan that her dad was a co-signer on, and she felt like she owed money to two people in that situation. Even though that wasn't the highest dollar amount or lowest dollar amount or highest interest rate, it was one of the very first ones that we paid off. If you have any recurring credit card debt, obviously pay that off. Anything double-digit should be paid off; you've got to get rid of that non-performing debt.

I took the money and I used it to pay off debt. We made a spreadsheet with all of our debts, tracked it every month, and watched the balance. Every time we paid off a debt, which you know how student loans are, they give you a different loan number every semester, so on our spreadsheet, it looked like we had 12 or 16 different loans, right? Every time we paid off a loan, we had spaghetti dinner to celebrate.

That's the key—the joy in looking back and thinking about those memories. It was a great time and we felt like we were making a lot of progress. It doesn't have to be fancy. After that was a period when we actually did a student loan refi. It was a point in life where a couple hundred dollars really mattered. We did all the hacks that you could think of. I refi'd with Sofi; I even refi'd a second time.

Some people can do public student loan forgiveness, but that's a 10-year track to getting rid of your student loans. Just consider if that makes you feel free. My main thing was freedom. I felt like I took out the loans, and it was my responsibility to pay them back. I minimized my student loan debt as much as I could while I was going through it. That was my strategy.

The fourth thing that I did was that apartment. The apartment increased my net worth during that time, but I never took a single penny out of it. I structured the deal with my grandpa so that when he put the money down to buy the house or the apartment and do the rehab and stuff like that, we had a loan with a bank and then with him that was a 0% interest loan to the business. It needed to be paid back before any owner's disbursements could occur.

I remember talking to a PA in general surgery while I was a resident, and the PA said to me, we were talking about funds, and she says, oh, I have lots of funds. I thought, oh wow, this is going to be great. Let's sit down and talk here, because this is my thing in residency, you know. She goes, I'm thinking, oh, you're going to have mutual funds or going to talk about whether or not you should try to beat the market or just buy the S&P 500 index fund or whatever. She goes, yeah, I've got a fence fund, a kitchen fund, and a bathroom fund.

What she's talking about is saving money to spend on personal spending, which I view anything again, in your house as a luxury spending item. You should view that as a big luxury spending item. It was not an inspiring conversation for me, so I quickly terminated it. But basically, what happened with that apartment is it did drive my net worth higher, but I didn't get any free cash flow out of it.

Long story short, a few years out of residency, I ended up buying my grandfather out. I still haven't taken any money out of it.

But I was telling that PA kind of about the deal, and she's like, well, that wouldn't make any sense. Why would you buy something if it wouldn't pay you anything back within five years? I'm like, pay you back for what? Like, so that you can buy more consumer spending things, right? But obviously, you look 5, 10, 20 years down the road, and the numbers just get ridiculous, especially when you're putting money back into an asset, and the freedom that it buys you is something that's then unfathomable to the general population.

And so you want to get over that hump, right? And the way that you, the way that it starts is by not needing it today, not spending it today. I'll tell you that I didn't always get this, and before I got married, it was. I didn't. I never got it until I got married. My wife is naturally good at this. I am not. When I moved to residency and I took my first real job making whatever, 50,000 a year or something, then I thought it was time to upgrade my lifestyle.

I bought a new car on a payment, and I bought a $500 bike because I thought to be an adult, you have to own certain things, and everybody needs a bike, and it needs to be the kind of bike that you want to have for your whole entire life, right? But it's not. And everything is going to rust and go away. This is me at 36 again; maybe it sounds stupid to somebody that's like in their 60s, but the other thing that happened is I moved back now to my family farm.

When I was, when I was like in high school, we replaced some gates, and I moved back to my family farm, and it's like those rusty old gates need to be replaced. But when I was there and we put those gates, I'm like, those are perfect gates. And that problem is solved forever because now that gate is there. That's one thing we never have to do again. And then you fast forward, like, you know, what is it, eight, you know, 20 years basically, and the gates are done.

The gates are hosed. We even put in treated 4-inch posts and installed a bunch of high tensile fence, right? And a lot of those high tensile fence posts have rotted off at the ground, and they're freely swinging, hanging on the high tensile wires. Okay? Nothing is permanent. Those things that you buy. It's not like it's a once and done. It's actually a once, and now I'm obligated to maintain it at some point in the future.

So the best way to be free is to not have this stuff in the first place, right? And that's where the frugality kind of gives you the freedom. You can say no to the things that don't matter to you so that you can say yes to the things that do matter. It's not about living small; it's about living smart and then ultimately living free.

And so I graduated residency then with no remaining student loan debt, and then I had shifted very much from that point from being a, the, the phase of my life where I really needed to save and get myself back to zero to the growth phase of my life. That was a good time for me to be able to do that because my income was then going up. Then I was able to keep myself from expanding my, in my spending to my full income.

And then I was able to start moving towards investing, which is what we'll be talking about in the next episode. How to take what you've saved and grow it wisely while still staying true to who you are. So this has been my episode, my musings about frugality. I appreciate you for listening, and wherever you're starting from, I have a challenge for you, which is to track your spending this month. Don't change anything yet, just become aware because awareness is the first step towards wisdom.

And remember what we do for others and the joy that we share along the way. That's what counts. So keep your hands open, your heart grounded, your purpose clear. Thanks for being here, and I'll see you next time on The Rural American Surgeon Podcast.